Food inflation slowed to a two year low in July as promotions linked to the summerÂ’s big events and falls in commodity prices helped push prices lower.

GENERAL MERCHANDISE

Food inflation slows to two year low

1 August 2012 | by The Retail Bulletin

Food inflation slowed to a two year low in July as promotions linked to the summerÂ’s big events and falls in commodity prices helped push prices lower.

According to figures released by the British Retail Consortium and Nielsen, the annual rate of food inflation fell to 3.1% last month from 3.5% in June.

Deflation in non-food remained unchanged at 0.3%, driving the overall rate of shop price inflation down to 1% from 1.1% in June.

Stephen Robertson, British Retail Consortium director general, explained: "A two-year low for food inflation is good news for hard-pressed households still suffering falls in disposable incomes. Lower shop price inflation is helping to narrow the gap between living costs and wage increases.

"Extra promotions, particularly linked to party food and this summer's big events, are combining with past falls in commodity prices which are working their way through to shop prices.

"But the relief may not last. Poor harvests, especially of corn and wheat in the USA, are creating a build-up of inflationary pressure. Animal feed has risen sharply in recent months and is likely to affect prices for things like meat, poultry and eggs."

Mike Watkins, senior manager, retailer services, Nielsen added: "We expect consumers to still be cautious about big ticket or discretionary spend, which is why there is no upward pressure on non-food prices at the moment."

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